<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
FIRST BRANDS CORPORATION
.................................................................
(Name of Registrant as Specified In Its Charter)
.................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
.................................................................
2) Aggregate number of securities to which transaction
applies:
.................................................................
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it was
determined):
.................................................................
4) Proposed maximum aggregate value of transaction:
.................................................................
5) Total fee paid:
.................................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
.................................................................
2) Form, Schedule or Registration Statement No.:
.................................................................
3) Filing Party:
.................................................................
4) Date Filed:
.................................................................
<PAGE>
[Logo]
FIRST BRANDS CORPORATION
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS TO BE
HELD ON OCTOBER 27, 1995
AND PROXY STATEMENT
<PAGE>
[Logo]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF
FIRST BRANDS CORPORATION
DANBURY, CONNECTICUT
September 27, 1995
To the Stockholders of
FIRST BRANDS CORPORATION:
The Annual Meeting of Stockholders of First Brands Corporation will be held
at the Danbury Hilton Hotel, 18 Old Ridgebury Road, Danbury, Connecticut on
Friday, October 27, 1995, commencing at 10:00 a.m., at which meeting only
holders of the common stock of record at the close of business on September 1,
1995, and those holding proxies from such stockholders will be entitled to vote,
for the following purposes:
1. To elect three directors;
2. To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the Company's 1996 fiscal year;
3. To ratify a proposal to adopt a Non-Employee Director Stock Option
Plan;
4. To ratify the adoption of an amendment to the Annual Incentive Plan
permitting an election by a participant to receive common stock of
the Company having a fair market value equal to 125% of the cash
award which would otherwise be received.
5. To transact such other business, if any, as may be properly brought
before the meeting.
We hope that you will be able to attend our annual meeting in person. If
you plan to do so, please return the enclosed ticket request. We will send your
ticket to you promptly. Please bring your ticket with you.
FIRST BRANDS CORPORATION
JOSEPH B. FUREY
By: ..................................
Joseph B. Furey
Vice President, Secretary and
Controller
EVEN THOUGH YOU MAY PLAN TO ATTEND THE MEETING IN PERSON, PLEASE MARK, DATE
AND EXECUTE THE ENCLOSED PROXY AND MAIL IT PROMPTLY. SHOULD YOU ATTEND THE
MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON IF YOU DESIRE. A RETURN
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES IS ENCLOSED
FOR YOUR CONVENIENCE.
<PAGE>
FIRST BRANDS CORPORATION
83 WOOSTER HEIGHTS ROAD
DANBURY, CONNECTICUT 06813-1911
------------------------
PROXY STATEMENT
------------------------
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD OCTOBER 27, 1995
This proxy statement is furnished to the stockholders of First Brands
Corporation ('First Brands' or the 'Company') in connection with the
solicitation of proxies for use at the Annual Meeting of Stockholders to be held
October 27, 1995, and at all adjournments thereof, for the purposes set forth in
the accompanying Notice of Annual Meeting of Stockholders. This proxy statement
and the enclosed form of proxy are first being mailed on or about September 27,
1995 to stockholders of record on September 1, 1995.
Whether or not you expect to be personally present at the meeting, you are
requested to fill in, sign, date and return the enclosed form of proxy. Any
person giving such proxy has the right to revoke it at any time before it is
voted by giving notice to the Secretary of the Company. All shares represented
by duly executed proxies in the accompanying form will be voted unless proxies
are revoked prior to the voting thereof.
The close of business on September 1, 1995, has been fixed as the record
date for the determination of stockholders entitled to vote at the Annual
Meeting of Stockholders. As of the record date, there were outstanding and
entitled to be voted at such meeting 20,973,064 shares of common stock. The
holders of the common stock will be entitled to one vote on each matter
submitted to stockholders for each share of common stock held of record on the
record date.
The Company's Annual Report for the fiscal year ended June 30, 1995
accompanies this Proxy Statement. The solicitation of this proxy is made by the
Board of Directors of the Company. The solicitation will be by mail and the
expense thereof will be paid by the Company. The Company has retained Morrow &
Co. Inc. to assist in the solicitation of proxies at an estimated cost of
$9,000. In addition, solicitation of proxies may be made by telephone or
telegram by directors, officers or regular employees of the Company.
A majority of the outstanding shares entitled to vote must be present in
person or represented by proxy at the Annual Meeting of Stockholders to
constitute a quorum. The shares represented by a proxy which is timely returned
and marked 'Abstain' as to any matter as well as broker non-votes will be
considered present at the Annual Meeting of Stockholders and will be included in
the calculation of those shares needed to constitute a quorum. The shares
represented by such proxies, although considered present for quorum purposes,
will not be considered present and entitled to vote with respect to any proposal
which is abstained from or to which the broker non-vote relates.
Directors of the Company are elected by a plurality of the votes cast at
the Annual Meeting of Stockholders if a quorum is present at such meeting. The
ratification of the appointment of independent auditors requires the approval of
a majority of the votes cast at the Annual Meeting of Stockholders, assuming
that a quorum is present. The affirmative vote of the holders of a majority of
the shares of common stock of the Company represented and voting at the annual
meeting is required for approval of the Non-Employee Directors Stock Option and
the amendment to the Annual Incentive Plan.
I. ELECTION OF DIRECTORS
The Board of Directors is divided into three classes of membership, with
terms expiring on different Annual Meeting dates. Three or four of the members
of the Board of Directors are elected each year to serve as directors for a term
of three years or such lesser term as consistent with the class. Directors are
elected for the terms specified and continue in office until their respective
successors have been elected and have qualified.
The Board of Directors at its meeting held May 23, 1995, selected the
following three nominees for election at the Annual Meeting of Stockholders each
for three-year terms expiring on the date of the
<PAGE>
Annual Meeting of Stockholders in 1998 and until their successors are elected
and qualified: Gary E. Gardner, Denis Newman and Ervin R. Shames. Certain
information with respect to the nominees for election as director and with
respect to directors whose terms extend beyond the date of the Annual Meeting of
Stockholders is set forth below.
Should any one or more of the nominees be unable or unwilling to serve
(which is not expected) the proxies (except proxies marked to the contrary) may
be voted for such other person or persons as the Board of Directors of the
Company may recommend.
<TABLE>
<CAPTION>
SHARES OF
FIRST BRANDS
COMMON STOCK
NAME, AGE, PRINCIPAL OCCUPATION OR POSITION, SERVED AS BENEFICIALLY
OTHER DIRECTORSHIPS AND COMMITTEES OF THE BOARD DIRECTOR SINCE OWNED(1)(2)(3)
- -------------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
TO BE ELECTED FOR TERMS ENDING IN 1998
GARY E. GARDNER, 41 ............................................................ 1994 109
President
Soft Sheen Products Inc. (Cosmetics)
Director, Amethyst Investment Group Inc. and
William Wrigley Jr. Company
Committee: Pension
DENIS NEWMAN, 65 ............................................................... 1986 45,342
Managing Director
MidMark Management, Inc. (Financial Services)
Director, GMIS, Inc.
Committees: *Audit and Executive
ERVIN R. SHAMES, 55 ............................................................ 1987 7,082
Private Investor and Consultant
Committees: Compensation and Nominating
TO CONTINUE IN OFFICE UNTIL 1997
JAMES R. MAHER, 45 ............................................................. 1988 2,135
President and CEO
MAFCO Consolidated Group, Inc. (Diversified Manufacturer)
Chairman
Laboratory Corp. of America (Health Services)
Committee: *Compensation
DWIGHT C. MINTON, 60 ........................................................... 1991 3,000
Chairman and CEO
Church & Dwight Co., Inc. (Consumer and Specialty Products)
Director, Crane Co. and Medusa Corporation
Committees: Audit and Pension
WILLIAM V. STEPHENSON, 54 ...................................................... 1992 192,400
President and CEO
First Brands Corporation
Committees: Executive and Nominating
ROBERT G. TOBIN, 57 ............................................................ 1991 3,000
Chairman, President and CEO
The Stop & Shop Companies, Inc. (Retail Food)
Committee: *Pension
</TABLE>
(table continued on next page)
2
<PAGE>
(table continued from previous page)
<TABLE>
<CAPTION>
SHARES OF
FIRST BRANDS
COMMON STOCK
NAME, AGE, PRINCIPAL OCCUPATION OR POSITION, SERVED AS BENEFICIALLY
OTHER DIRECTORSHIPS AND COMMITTEES OF THE BOARD DIRECTOR SINCE OWNED(1)(2)(3)
- -------------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
TO CONTINUE IN OFFICE UNTIL 1996
ALFRED E. DUDLEY, 67 ........................................................... 1986 221,000
Chairman
First Brands Corporation
Director, Hampshire Chemical Corporation
Committees: *Executive and Nominating
ALAN C. EGLER, 67 .............................................................. 1986 83,000
Former Vice Chairman
First Brands Corporation
Committees: Executive and Audit
JAMES R. MCMANUS, 61 ........................................................... 1986 0
Chairman, CEO and Founder
Marketing Corporation of America (Marketing Services)
Director, Au Bon Pain Co. Inc.
Committees: Compensation and Nominating
</TABLE>
- ------------
* Chairman
(1) Beneficial ownership of First Brands common stock is stated as of September
1, 1995. Under rules of the Securities and Exchange Commission, persons who
have power to vote or dispose of securities, either alone or jointly with
others, are deemed to be the beneficial owners of such securities.
Accordingly, shares owned separately by spouses are not included. Each
nominee and continuing director has both sole voting power and sole
investment power with respect to the shares set forth in the table.
(2) No nominee or continuing director is the beneficial owner of more than 1.05%
of the outstanding shares of First Brands common stock.
(3) Includes 82,000 and 104,000 shares which respectively Alfred E. Dudley and
William V. Stephenson have a right to acquire within 60 days of September 1,
1995 upon the exercise of stock options.
------------------------
Each of the nominees and directors has had the same position or other
executive positions with the same employer during the past five years, except as
follows:
Alfred E. Dudley relinquished on September 1, 1994 the title of Chief
Executive Officer to Mr. W. V. Stephenson. He has been Chairman of the Company
since 1986.
Alan C. Egler was Vice Chairman and consultant to the Company from 1986
through 1991.
James R. Maher has been President and Chief Executive Officer of MAFCO
Consolidated Group, Inc. (diversified manufacturer) since July, 1995. Mr. Maher
has been Chairman of the Board of Laboratory Corporation of America (health
services) since April, 1995. He was President and Chief Executive Officer of
Laboratory Corporation of America from December, 1992 to April, 1995. Mr. Maher
was Vice-Chairman of the First Boston Corporation (financial services) from
September, 1990 through June 30, 1992. He was a Managing Director of the First
Boston Corporation from January, 1983 to September, 1990.
Ervin R. Shames is a private investor and consultant. He was President and
Chief Executive Officer of Borden, Inc. (consumer and specialty products) from
December, 1993 to January, 1995. He was President and Chief Operating Officer of
Borden, Inc. from July, 1993 to December, 1993. Mr. Shames was Chairman and
Chief Executive Officer of The Stride Rite Corporation (footwear manufacturer)
from June, 1992 to July, 1993 and President and Chief Executive Officer of The
Stride Rite Corporation from June, 1990 to June, 1992.
3
<PAGE>
William V. Stephenson has been President and Chief Executive Officer of the
Company since September 1, 1994. He was President and Chief Operating Officer
from August 11, 1992 to August 31, 1994. From October, 1991 to August, 1992 he
was Executive Vice President of the Company and President of the Home Products
Division. From January, 1990 through September, 1991 Mr. Stephenson was Senior
Vice President/General Manager, Home Products Division.
Robert G. Tobin has been Chairman of The Stop & Shop Supermarket Companies,
Inc. and The Stop & Shop Supermarket Company (retail food) since January, 1995.
He was President and Chief Executive Officer of The Stop & Stop Supermarket
Company since May, 1994. He was President and Chief Operating Officer of The
Stop & Shop Companies, Inc. and The Stop & Shop Supermarket Company a
wholly-owned subsidiary, since March 1993 and November 1989, respectively.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the
beneficial ownership of common stock by each stockholder who is known by the
Company to own beneficially in excess of 5% of the outstanding common stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- --------------------------------------------------------------- -------------------- ----------------
<S> <C> <C>
Harris Associates
2 North LaSalle Street
Chicago, IL 60602............................................ 2,887,108(a) 13.75
Fidelity Management & Research Company
82 Devonshire
Boston, MA 02109............................................. 2,598,700(b) 12.39
Ariel Capital Management, Inc.
307 North Michigan Ave.
Chicago, IL 60601............................................ 1,668,954(c) 7.95
</TABLE>
- ------------
(a) Information concerning beneficial ownership by Harris Associates is based
on a report on Form 13F filed with the Securities and Exchange Commission
(the 'SEC') as of June 30, 1995. To the Company's knowledge, Harris &
Associates has not filed a Schedule 13D or Schedule 13G with respect to any
changes in their ownership of the Company's common stock.
(b) Information concerning beneficial ownership by Fidelity Management &
Research Company is based on a report on Form 13G filed with the SEC as of
September 7, 1995. To the Company's knowledge, Fidelity Management &
Research Corporation has not filed a Schedule 13D with respect to their
ownership of the Company's common stock.
(c) Information concerning beneficial ownership by Ariel Capital Management,
Inc. is based on a report on Form 13F filed with the SEC as of June 30,
1995. To the Company's knowledge, Ariel Capital Management, Inc. has not
filed a Schedule 13D or Schedule 13G with respect to any change in
ownership of the Company's common stock.
------------------------
The following table sets forth certain information concerning the
beneficial ownership of common stock as of September 1, 1995 by the Chief
Executive Officer, the other four most highly compensated executive officers of
the Company, and all Directors and Executive Officers as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(D) PERCENT OF CLASS
- --------------------------------------------------------- ----------------------- ----------------
<S> <C> <C>
William V. Stephenson.................................... 192,400 .92
Thomas H. Rowland........................................ 91,500 .44
Donald A. DeSantis....................................... 99,983 .48
J. Bruce Ipe............................................. 77,600 .37
Thomas J. Nathanson...................................... 36,539 .17
All Directors and Executive Officers as a group.......... 997,405 4.76
</TABLE>
(footnotes on next page)
4
<PAGE>
(footnotes from previous page)
(d) Includes 104,000, 91,000, 66,000, 34,000, 36,125 and 491,075 shares which
respectively William V. Stephenson, Thomas H. Rowland, Donald A. DeSantis,
J. Bruce Ipe, and Thomas J. Nathanson and all Directors and Executive
Officers as a group, have a right to acquire within 60 days of September 1,
1995 upon the exercise of stock options. The shares issuable upon exercise
of options included herein were deemed to be outstanding for purposes of
calculating the percentages of shares.
BOARD OF DIRECTORS AND COMMITTEES
There were six regular meetings of the Board of Directors during fiscal
1995. All of the incumbent directors, except Mr. Dwight Minton, attended at
least 75% of the total number of meetings of the Board and committees on which
they served. Directors who are employees of the Company do not receive any
compensation for service as directors. Mr. Dudley, who retired from the Company
on September 1, 1994, receives an annual retainer of $300,000 for services as
Chairman of the Board of Directors. Each of the other directors is currently
paid an annual retainer of $20,000 and fees of $1,000 for attendance at each
Board or committee meeting not held in conjunction with a Board meeting. Board
members are paid $500 for attendance at each telephonic meeting or committee
meeting held in conjunction with a Board meeting. Pursuant to a resolution
adopted on September 6, 1991, these Directors are reimbursed for reasonable
expenses involved in attending Board and Committee Meetings of the Company.
Should the stockholders approve the 1996 Non-Employee Director Stock Option
Plan, certain additional benefits will accrue to the members of the Board of
Directors. Under the Plan each participant is granted options to purchase 2,000
shares of the Company's Common Stock in the first year and 1,000 shares in each
subsequent year thereafter for four years. The exercise price of these options
is the average of the high and low closing market price of the date of the
grant.
The members of the Board of Directors are elected to various committees.
The standing committees of the Board are: Audit Committee, Compensation
Committee, Executive Committee, Nominating Committee and Pension Committee.
The functions of the Audit Committee are to recommend the firm of
independent auditors to perform the annual audit; review and approve the scope
of the independent and internal auditors' work; review the effectiveness of the
Company's internal controls; review and approve the fees of the independent
auditors and related matters. The Audit Committee met once in fiscal 1995. The
members of the Audit Committee are Denis Newman, Chairman; Alan C. Egler and
Dwight C. Minton.
The functions of the Compensation Committee are to review and approve the
salaries of senior officers and managers of the Company; approve the amount
authorized for the Annual Incentive Plan; approve awards under and administer
the Company's Long-Term Incentive Plans; and review additional compensation
arrangements. The Compensation Committee met twice in fiscal 1995. The members
of the Compensation Committee are James R. Maher, Chairman; James R. McManus and
Ervin R. Shames.
The function of the Executive Committee is to act for the Board between
regular meetings to the extent permitted by the Delaware General Corporation Law
on matters that need timely attention. The Executive Committee met once in
fiscal 1995. The members of the Executive Committee are Alfred E. Dudley,
Chairman; Alan C. Egler, Denis Newman and William V. Stephenson.
The functions of the Nominating Committee are to establish criteria for
Board membership, search for and screen candidates to fill vacancies on the
Board, recommend an appropriate slate of candidates for election each year,
assess the overall performance of the Board, and consider issues regarding the
composition, tenure and size of the Board. The Nominating Committee will
consider nominations by stockholders. Recommendations should be sent to the
Secretary at 83 Wooster Heights Road, Danbury, Connecticut 06813 no later than
May 6, 1996 with respect to the 1996 Annual Meeting of Stockholders and should
include the candidate's name and qualifications and statement from the candidate
that he or she consents to being named in the Proxy Statement and if nominated
will serve if elected. The Committee, which was established at the May 23, 1995
Board of Directors Meeting, did not meet in
5
<PAGE>
fiscal 1995. The members of the Nominating Committee are Alfred E. Dudley, James
R. McManus, Ervin R. Shames and William V. Stephenson.
The functions of the Pension Committee are to supervise the administration
of the Company's pension and savings plans; review the levels of funding and
allocation of funds invested in the plans; and review the performance of the
investments and investment managers against goals. The Pension Committee met
three times in fiscal 1995. The members of the Pension Committee are Robert G.
Tobin, Chairman; Gary E. Gardner and Dwight C. Minton.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board consists of three non-employee
directors who make decisions pertaining to executive compensation and benefits.
The Committee utilizes the services of an outside compensation consultant to
assist in making objective decisions based on data from consumer products
companies of similar size, some of which are in the peer group of companies
included in the stock performance graph. Additional similar data is provided by
the consultant as well as management.
COMPENSATION PHILOSOPHY
The Company's executive compensation program has three objectives:
1. To provide compensation that rewards executives for meeting and
exceeding internal performance goals and standards.
2. To maintain a compensation program that attracts and retains high
quality executives.
3. To create a link between the interests of the Company's
stockholders, the Company's financial performance and the total
compensation opportunities for its executive officers.
The executive compensation program consists of base salary, an annual cash
incentive plan, long-term stock option incentive plans, a non-qualified deferred
compensation plan and qualified and non-qualified retirement plans.
The Company maintains a benefit program that is competitive with other
consumer products companies of similar size. The program includes qualified
retirement, savings, life insurance, and disability programs as well as medical,
dental and business travel insurance programs.
Base salaries are targeted slightly below the 50th percentile of
competitive salaries for executives of consumer products companies of similar
size. Salary ranges are established using published surveys and other external
data. Variation in compensation between individuals is based on position value,
experience level and performance against pre-established objectives. Individual
increases are typically given at thirteen to sixteen month intervals, and the
amount is based on the individual's performance and place in the salary range.
Prior to approving individual increases, the Compensation Committee reviews each
senior executive's performance against previously established performance goals.
The Annual Incentive Plan provides for an annual cash award based on
attainment of operating income goals and the awards are targeted at slightly
above the 50th percentile for executives of consumer products companies of
similar size. The plan triggers if a pre-approved threshold is achieved.
Individual awards are determined by total corporate, business unit, and
individual performance levels. The performance level of the business unit is
measured on an unweighted basis by sales growth, market share, and operating
income. Individual performance goals are established for each senior executive
at the commencement of each year. The Compensation Committee approves the total
dollar pool available and the amount awarded to each senior executive
participant. In respect of the named executives in the Summary Compensation
Table, the Compensation Committee will also assess the Company's relative
financial performance against peer group consumer products companies considering
such measures as earnings per share growth, sales growth, improvement in return
on equity and acquisition success.
The Long Term Incentive Plans were established in 1989 and 1994. All option
shares available under the 1989 Long Term Incentive Plan have been granted. The
1989 plan provides for non-qualified stock options, limited stock appreciation
rights ('LSAR's') and restricted stock. LSAR's are exercisable only in change of
control situations. The 1994 Performance Stock Option and Incentive Plan
provides
6
<PAGE>
for stock options, LSAR's and restricted stock. Options may have an exercise
price of either 100 percent of the fair market value of the underlying shares of
common stock ('Market Priced Options') or more than 100% of such fair market
value ('Premium Priced Options'). Of the Market Priced Options, a portion may
vest as of specific dates and a portion may be subject to performance vesting.
At the time of the grant a 'trigger stock price' or other performance criteria
upon which the vesting of performance options will be based may be established.
These options will be exercisable at the earlier of the date that the market
price exceeds the trigger stock price or the ninth anniversary of the grant.
During fiscal year 1995, 441,000 options were granted and no restricted stock
has been granted under the 1994 Plan. The Compensation Committee approves grants
of a sufficient number and type of stock options to retain executives based on
its review of surveys of long-term incentive and long-term capital accumulation
plans available to similar positions at other consumer product companies of
similar size.
In addition to the qualified retirement plans, officers of the Company also
participate in a non-qualified retirement plan that alleviates the impact of tax
or legal restrictions imposed upon qualified plan limits when total compensation
is used in calculation of pension benefits.
The Company has established a non-qualified deferred compensation plan for
senior executives. This plan permits deferral of a portion of base salary and/or
annual incentive awards to a later date, normally until after retirement.
Interest on deferred compensation is based on 7-year U.S. Treasury Bond yields
plus a margin which is intended to approximate the margin First Brands would
incur if it were issuing a senior unsecured bond with a 7-year maturity. If the
participant defers salary or bonus for seven (7) or more years or until death,
disability or retirement, the interest on the deferred amount for the entire
period will be the Treasury Bond yield, plus the margin, plus 3%.
The Compensation Committee endorses the position that stock ownership by
management provides linkage in aligning management's and shareholder's interest
in enhancing shareholder value although the Committee does not set target
ownership levels for executive equity holdings.
Section 162(m) of the Internal Revenue Code, enacted in 1993, limits the
tax deduction that corporations may take with respect to the compensation of
certain executive officers, unless the compensation is 'performance based' as
defined in the Code. The Committee believes that all compensation received by
the executive officers is performance based and in any event the deductibility
limits in the Code have not been reached. There is no loss of deduction for
fiscal year 1995.
RELATIONSHIP OF CORPORATE PERFORMANCE TO EXECUTIVE COMPENSATION
The Company has two types of executive compensation incentive plans, The
Annual Incentive Plan and the Long Term Incentive Plans (both previously
described), which reward executives based on the performance of the Company.
The Annual Incentive Plan provides compensation based on the attainment of
operating income objectives which are contained in the annual business plan. For
the named executives in the Summary Compensation Table, Company financial
performance relative to a peer group of companies is also considered in order to
validate incentive compensation in respect to these companies. The annual
business plan is developed by Company management and approved by the Board of
Directors at the beginning of each fiscal year. The financial measures used to
validate incentive awards are approved by the Compensation Committee at the
beginning of each fiscal year.
The Long Term Incentive Plans use stock price appreciation as the incentive
to reward executives over the long term. Compensation gained as a result of this
program has a direct relationship to the gain achieved by investors in the
Company's stock.
1995 FISCAL YEAR COMPENSATION OF CHIEF EXECUTIVE OFFICER
Mr. Stephenson assumed the position of Chief Executive Officer in addition
to his position of President on September 1, 1994. His salary was increased to
$325,000 per year. He received an annual incentive award of $300,000 for the
fiscal year. The salary increase was based on his overall performance level as
determined by the Compensation Committee. In determining Mr. Stephenson's
overall performance level, the Compensation Committee considered the following
measures of performance by
7
<PAGE>
the Company on an unweighted basis: return on equity, sales growth, growth
through acquisitions, market share, operating income, return on capital,
earnings per share and overall management effectiveness. Since the Company's
financial results for the past fiscal year were significantly improved over the
proforma fiscal year 1994 figures (which exclude the Prestone automotive
products business sold in August, 1994), and because of his additional
responsibilities as Chief Executive Officer, Mr. Stephenson's annual incentive
award was 50% higher than the preceding year.
COMPENSATION COMMITTEE
James R. Maher, Chairman
James R. McManus
Ervin R. Shames
SUMMARY COMPENSATION TABLE
Furnished below is a summary of the compensation paid and/or awarded to the
Chief Executive Officer and to each of the other four most highly compensated
executive officers of the Company for fiscal years 1993-1995.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
NAME AND --------------------------------- COMP.(1) ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OTHER(2) OPTIONS(#) COMPENSATION(3)($)
- ---------------------------------------- ---- --------- -------- -------- --------- ------------------
<S> <C> <C> <C> <C> <C> <C>
William V. Stephenson .................. 1995 312,500 300,000 -- 50,000 5,175
President and CEO 1994 223,000 200,000 -- 5,018
1993 175,500 125,000 20,000 3,949
Thomas H. Rowland ...................... 1995 184,535 120,000 -- 30,000 4,251
Executive Vice President, 1994 164,000 80,000 -- 3,691
Home Products 1993 138,283 50,000 35,000 3,112
Donald A. DeSantis ..................... 1995 188,160 120,000 -- 20,000 4,262
Sr. Vice President, CFO 1994 175,400 100,000 -- 3,947
and Treasurer 1993 167,380 38,000 12,000 3,767
J. Bruce Ipe ........................... 1995 178,125 72,000 -- 8,000 4,135
Vice President and 1994 171,300 60,000 -- 3,855
General Counsel 1993 165,300 32,000 8,000 3,720
Thomas J. Nathanson .................... 1995 147,775 65,000 -- 18,000 3,887
Vice President, 1994 133,333 50,000 -- 3,000
Operations and 1993 99,650 24,000 12,000 2,243
Technology
</TABLE>
- ------------
(1) There were 441,000 options granted under the 1994 Performance Stock Option
and Incentive Plan during 1995 fiscal year for executive officers and other
employees. All options under the 1989 Long Term Incentive Plan have
previously been granted.
(2) Amounts under Other Annual Compensation are not shown since the value of
perquisites and other personal benefits does not exceed the lesser of
$50,000 or 10% of the total amount of annual salary and bonus for any named
individual.
(3) All compensation listed under 'all other compensation' is from employer
match from the savings plan. The total amount of employer match for all
executive officers for fiscal year 1995 is $32,516. Amounts listed for
previous fiscal years were not listed separately in previous proxy
statements.
8
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows the individual grant of non-qualified stock
options, pursuant to the 1994 Performance Stock Option and Incentive Plan, to
the Chief Executive Officer and the other four most highly compensated executive
officers of the Company for fiscal year 1995.
<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES PRICE APPRECIATION
UNDERLYING % OF TOTAL FOR 10 YEAR OPTION
OPTIONS OPTIONS EXERCISE TERM
GRANTED GRANTED PRICE PER EXPIR. ----------------------
NAME (#)(3) IN FY 1995 SHARE($)(1) DATE 5%($)(2) 10%($)(2)
- ---------------------------------------- ---------- ---------- ----------- ------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
W.V. Stephenson......................... 50,000 11.3% 32.750 8/8/04 1,030,000 2,610,000
T.H. Rowland............................ 30,000 6.8% 32.750 8/8/04 618,000 1,566,000
D.A. DeSantis........................... 20,000 4.5% 32.750 8/8/04 412,000 1,044,000
J.B. Ipe................................ 8,000 1.8% 32.750 8/8/04 164,800 417,600
T.J. Nathanson.......................... 18,000 4.1% 32.750 8/8/04 370,800 939,600
</TABLE>
- ------------
(1) The exercise price was determined by averaging the high and low market price
on August 9, 1994, the day the options were granted.
(2) The potential realizable value portion of the foregoing table illustrates
value that might be realized upon exercise of the options immediately prior
to the expiration of their term, assuming the specified compounded rates of
appreciation on the Company's common stock over the full term of the
options.
The rates of appreciation are assumed rates established by the Securities
and Exchange Commission and are not intended as a forecast of future
appreciation. 5% annual appreciation results in a stock price appreciation
of $20.60 per share and 10% results in a stock price appreciation of $52.20
per share. The actual gain, if any, realized by the recipient will depend
upon the actual performance of the Company's common stock. There can be no
assurance that the amounts reflected in this table will be achieved.
(3) The exercise price of stock options is not less than the fair market value
of the Company's common stock on the date of grant; such stock options vest
over a period determined by the Compensation Committee. The stock options
granted in the fiscal year 1995 to the executive officers named above are
performance-based (using a trigger stock price in excess of $42.00 per
share) for all except Mr. J. B. Ipe, whose option grant is split evenly
between time based and performance based portions. LSAR's were granted in
tandem with the stock option grants to the named executive officers in
amounts equal to the number of stock options granted. LSAR's are exercisable
only upon a change of control of the Company. Upon exercise, the recipient
would receive, in cancellation of the underlying stock option, cash equal to
the excess of the fair market value of each share of common stock subject to
the LSAR over the exercise price of the underlying stock option. The
Compensation Committee has discretion to adjust the terms of outstanding
awards, including the exercise price of stock options, in the event of an
extraordinary or unusual corporate event.
9
<PAGE>
OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
The following table lists the shares acquired on exercise of options by the
Chief Executive Officer and the other four most highly compensated executive
officers during the fiscal year 1995 and certain information as to options
unexercised at the end of fiscal year 1995.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR END FISCAL YEAR END(1)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
W.V. Stephenson................. -- -- 54,000 50,000 $ 935,750 $ 506,250
T.H. Rowland.................... -- -- 61,000 30,000 $ 996,063 $ 303,750
D.A. DeSantis................... -- -- 46,000 20,000 $ 840,875 $ 202,500
J.B. Ipe........................ -- -- 30,000 8,000 $ 547,250 $ 81,000
T.J. Nathanson.................. -- -- 18,125 18,000 $ 275,922 $ 182,250
</TABLE>
- ------------
(1) Values have been calculated based on the closing price of the Company's
common stock reported on the New York Stock Exchange Composite Tape on June
30, 1995, which was $42.875 per share.
RETIREMENT PLAN
First Brands currently maintains a non-contributory defined benefit
retirement plan (the 'Retirement Plan') covering 78% of all U.S. employees
including those of subsidiaries. The officers listed in the foregoing Summary
Compensation Table are covered by the Retirement Plan. Outside the United
States, certain of First Brands' subsidiaries have retirement programs that are
generally administered by trustees or insurance companies.
Under the Retirement Plan, the monthly amount of an employee's retirement
benefit upon retirement at age 65 is the greater of (a) 1.2% of average monthly
compensation received during the three year period preceding retirement, or 1.2%
of average monthly compensation received during the three best calendar years in
the final ten calendar years preceding retirement, if the latter average would
result in a higher pension benefit, multiplied by the number of years of
credited service plus $12 or (b) 1.5% of the average monthly compensation
computed as in (a) above, multiplied by the number of years of credited service,
less a percentage, based on service and not exceeding 50%, of the projected
primary Social Security benefit or such maximum percentage as is allowed under
the Internal Revenue Code. In January 1995, the Company announced a change in
this formula beginning January 2000, to a defined benefit based on years of
credited service and career average compensation.
An employee who is (i) age 62 or over with ten or more years of credited
service or (ii) whose age and years of credited service add up to 85, may
voluntarily retire earlier than age 65 with a retirement benefit, unreduced
because of early retirement. Employees may retire as early as age 50 with 10
years of credited service but will receive an actuarially reduced pension
benefit.
The amounts contributed by First Brands to the Retirement Plan are
calculated on a group basis that is actuarially determined. No specific amount
is set aside by First Brands for any individual officer or employee under the
Retirement Plan. The amounts shown in the following table are the estimated
annual retirement benefits payable at age 65 for the respective average annual
remuneration levels and years of service credit indicated. Actual benefits will
not exceed limits permitted under the Internal Revenue Code and applicable
regulations. Amounts shown are computed based upon straight life annuity amounts
and are reduced by 1.5% of the employee's primary Social Security benefit for
each year of the employee's credited service up to a maximum deduction of 50% of
such Social Security benefit. Annual retirement benefits are based on average
earnings.
For federal income tax purposes the amount of benefits that can be paid
from the qualified plan is restricted. First Brands maintains a nonqualified
plan ('Executive Retirement Plan') the effect of which is to award retirement
benefits to all employees on a uniform basis. The Executive Retirement Plan is
unfunded.
10
<PAGE>
The Company also maintains a savings plan as part of its long term
retirement/savings program to which it contributes to the account of each
eligible employee who chooses to participate. Prior to January 1995, the Company
contributed 10, 20 or 30% of the first 7.5% of the amount contributed by the
employee in the form of basic deductions, depending upon length of service. Any
regular employee with one or more years of service was eligible to participate.
Effective January 1995, the Company contributes 50% of the first 6% of the
amount of employee basic 401(k) contributions. Any regular employee of First
Brands or its subsidiaries is eligible to participate. Beginning in fiscal year
1996, the Company will provide a Profit Sharing contribution based on the
Company's operating performance. Profit Sharing will be contributed in shares of
First Brands common stock, allocated to separate employee 401(k) accounts based
on Company service credit.
As of June 30, 1995, the credited years of service (credited service is
combined from First Brands and Union Carbide Corporation) for the individuals
named in the Summary Compensation Table were as follows: William V. Stephenson,
31 years; Thomas H. Rowland, 21 years; Donald A. DeSantis, 9 years; J. Bruce
Ipe, 25 years; and Thomas J. Nathanson, 21 years.
<TABLE>
<CAPTION>
AVERAGE ANNUAL REMUNERATION ESTIMATED ANNUAL RETIREMENT BENEFITS
USED FOR CALCULATING RETIREMENT BENEFITS AT AGE 65 FOR YEARS OF SERVICE CREDIT
- ------------------------------------------- --------------------------------------------------------
25 30 35 40 45
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$150,000................................... $ 56,250 $ 67,500 $ 78,750 $ 90,000 $101,250
$200,000................................... 75,000 90,000 105,000 120,000 135,000
$250,000................................... 93,750 112,500 131,250 150,000 168,750
$300,000................................... 112,500 135,000 157,500 180,000 202,500
$350,000................................... 131,250 157,500 183,750 210,000 236,250
$400,000................................... 150,000 180,000 210,000 240,000 270,000
$450,000................................... 168,750 202,500 236,250 270,000 303,750
$500,000................................... 187,500 225,000 262,500 300,000 337,500
$550,000................................... 206,250 247,500 288,750 330,000 371,250
$600,000................................... 225,000 270,000 315,000 360,000 405,000
$700,000................................... 262,500 315,000 367,500 420,000 472,500
$800,000................................... 300,000 360,000 420,000 480,000 540,000
</TABLE>
SEVERANCE AGREEMENTS
The Company has also adopted an employment severance agreement with certain
management employees, including executive officers, generally providing
severance benefits if the employee is terminated for reasons other than 'cause'
within two years after a 'change in control.' The severance benefits include
cash payments equal to two year's salary and bonus, except for William V.
Stephenson, who would receive payments equal to three years salary and bonus,
and certain other employee and retirement benefits. Provision for a tax gross-up
payment is also included to cover excise taxes, if any, on payments paid under
these agreements.
STOCK PERFORMANCE GRAPH
The following table compares total shareholder returns for the Company to
the Standard & Poors 500 Stock Index ('S&P 500') and the Standard & Poors Midcap
400 Consumer Products Index ('S&P 400 CP')(1) for the five year period beginning
June 30, 1990 through the fiscal year end of June 30, 1995 (the 'Performance
Period'). Assuming $100 was invested on June 30, 1990 in the Company's common
stock and in each of the foregoing indices and reinvestment of dividends, if
any, on a quarterly basis, the total return for the Company's common stock
increased by 53% during the Performance Period as compared with total return
during the same period for the S&P 500 and S&P 400 CP of 77% and 12%,
respectively. The corresponding compound annual growth rate for the Company's
stock was 8.9% for the five-year period.
Assuming $100 was invested in the Company's common stock on December 29,
1989, the end of the first month following the Company's initial public offering
('IPO'), through June 30, 1995 the return on the stock increased by 135%
compared with 82% and 26% for the S&P 500 and 400CP indexes,
11
<PAGE>
respectively. The corresponding compound annual growth rate for the Company's
stock was 16.7% for the 5 1/2-year period.
There can be no assurance that the Company's stock performance will
continue into the future with the same or similar trends depicted in the graph
below. The Company will not make or endorse any predictions as to the future
stock performance.
FIRST BRANDS CORPORATION
Total Return Performance(2)
TOTAL SHAREHOLDER RETURNS
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
COMPARISON SINCE JUNE 1990
<S> <C> <C> <C> <C> <C> <C> <C>
CAGR(3)
6/90 6/91 6/92 6/93 6/94 6/95 6/90
FBC 100 98 95 103 130 153 8.9%
S&P 500 100 107 122 138 140 177 12.1%
S&P 400 CP 100 116 132 124 103 112 2.3%
<CAPTION>
COMPARISON SINCE
1989 IPO
<S> <C> <C> <C>
12/89 6/95 CAGR(3)
FBC 100 235 16.7%
S&P 500 100 182 11.5%
S&P 400 CP 100 126 4.3%
</TABLE>
(1) The S&P Midcap 400 Consumer Products Index is comprised of the following
companies: Church & Dwight, A.T. Cross, First Brands, Gibson Greetings,
Lancaster Colony, National Presto, Stanhome, Tambrands, Perrigo and Carter
Wallace. First Brands has not been eliminated from this peer group for
purposes of this presentation.
(2) Data from the 'S&P 400 CP' index shows differences compared to last year's
due to the elimination of Neutrogena and the addition of Perrigo and Carter
Wallace.
(3) Compound Annual Growth Rate.
II. RATIFY APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG Peat Marwick LLP as the
independent auditors to examine the financial statements of the Company and its
consolidated subsidiaries for the fiscal year 1996. KPMG Peat Marwick LLP has
served First Brands in the capacity of independent auditors since its
incorporation in 1986.
Representatives of KPMG Peat Marwick LLP will be present at the Annual
Meeting of Stockholders to answer any appropriate questions. They will have the
opportunity to make a statement if they so desire.
The Board of Directors recommends a vote FOR the appointment of KPMG Peat
Marwick LLP.
12
<PAGE>
III. RATIFY THE ADOPTION OF A NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
The Board of Directors of First Brands Corporation (the 'Board') has
approved the adoption of the First Brands Corporation Non-Employee Director
Stock Option Plan (the 'Director Option Plan') in addition to the usual retainer
and fees for attendance at each Board or committee meeting. The Board believes
the Director Option Plan can help attract and keep talented directors, and
encourage them to take a long-term strategic view, as well as align director
interests with those of other stockholders.
The Director Option Plan is a non-discretionary plan administered by the
Board and, subject to stockholder ratification, will become effective on October
30, 1995 and end five (5) years later on October 30, 2000. Under the Director
Option Plan, non-qualified stock options to purchase the Company's common stock,
0.01 per value per share (the 'Stock') will be granted on the first Friday
following the annual meeting of stockholders every year. Each elected,
re-elected or continuing non-employee director will be granted an option to
purchase 2,000 shares in the first year and an option to purchase 1,000 shares
each year for four (4) years thereafter; newly elected non-employee directors
will receive 2,000 option shares on the first Friday following the first annual
stockholder meeting at which they are first elected. The options, which will
vest two years after the date of the grant, will have a ten (10) year term and
an exercise price per share equal to the average of the high and the low prices
at which the stock is traded on the date of the grant. The closing price per
share of the Stock on the New York Stock Exchange on September 1, 1995 was
$43.875. Based upon the current number of nine non-employee directors, options
granted during the first year of the plan would be 18,000 and in each succeeding
year 9,000. A total of 60,000 shares of stock will be reserved for delivery
under the Director Option Plan.
If a participating director terminates service on the Board by reason other
than retirement, death or disability, only those options that have then vested
are exercisable within sixty (60) days of cessation of service but not later
than the end of the option term. If a participating director ceases service on
the Board by reason of retirement as a result of a mandatory retirement policy
of the Board, death or disability, all options granted are immediately
exercisable and remain exercisable for a period ending the earlier of two (2)
years from the date of retirement, death or disability or the expiration of the
option term.
The Director Option Plan shall be administered by the Board who may
terminate or amend the Director Option Plan as they deem advisable. However, an
amendment revising the price, date of exercisability, option period of, or
amount of shares under the Plan shall not be made more frequently than every six
(6) months unless necessary to comply with Federal law. No amendment may revoke
or alter in a manner unfavorable to the grantees any option then outstanding,
nor may the Board amend this Director Option Plan without stockholder approval
where the absence of such approval would cause the Director Option Plan to fail
to comply with Rule 16b-3 under the Securities Exchange Act of 1934, or any
other applicable law or regulation.
The following is a brief summary of the principal Federal income tax
consequences of awards under the Director Option Plan based upon current Federal
income tax laws. The summary is not intended to be exhaustive and, among other
things, does not describe state, local or foreign tax consequences.
A participating director is not subject to Federal income tax at the time
of grant of a stock option. Upon exercise of the stock option, the director must
pay tax on ordinary income equal to the difference between the exercise price
and the fair market value of the stock on the date of exercise. The Company will
receive a corresponding tax deduction at the time of exercise.
This summary of the Director Option Plan is qualified in its entirety by
reference to the entire text of the Director Option Plan which is attached
hereto as Exhibit A.
The affirmative vote of the holders of a majority of the shares of Stock of
the Company represented and voting at the annual meeting is required for
approval of the amendment to the Director Option Plan.
The Board of Directors recommends a vote FOR the adoption of the Director
Option Plan.
13
<PAGE>
IV. RATIFY THE USE OF COMPANY STOCK AS AN ALTERNATIVE IN THE ANNUAL INCENTIVE
PLAN FOR SENIOR MANAGEMENT
The First Brands Corporation Annual Incentive Plan (the 'Annual Incentive
Plan') was adopted by the Board of Directors (the 'Board') in 1986 to promote
the success of the Company by providing performance based compensation for
certain key employees ('Participants'). An amendment to the Annual Incentive
Plan has been approved by the Board which would permit certain senior manager
Participants in the Annual Incentive Plan to elect to receive all or part of
their incentive award in common stock of the Company. This amendment as approved
by the Board is proposed for ratification by the stockholders. The Board
believes this addition to the Annual Incentive Plan encourages stock ownership
by its senior managers which further aligns the interests of senior management
with those other stockholders.
Participants in the Annual Incentive Plan are recommended annually by the
Chief Executive Officer and approved by the Compensation Committee of the Board
(the 'Committee').
Currently, Participants include the Chief Executive Officer and the four
most highly compensated executives, other than the Chief Executive Officer,
whose cash awards under the Annual Incentive Plan are included in the Summary
Compensation Table in this annual Proxy Statement. Participants in the Annual
Incentive Plan also include other key employees.
The Annual Incentive Plan is administered by the Committee which has not
less than three non-employee directors who are not eligible to participate in
the Annual Incentive Plan and are designated by the Board. Based upon the
recommendation of the Chief Executive Officer, the Committee determines which
eligible employees will receive awards, sets performance goals, and determines
the degree of attainment of such performance goals, the amount to be awarded to
a Participant, and the timing and form of each such award.
In the past, awards under the Annual Incentive Plan have been in cash or
deferred cash only. The Annual Incentive Plan is being amended, and stockholder
approval is being sought, to provide that certain of the Participants selected
by the Committee be entitled to elect to receive shares of $0.01 par value
common stock of the Company (the 'Stock') in lieu of all or a portion of a cash
award. Those Participants entitled to elect to receive all or a portion of their
award in stock, are entitled to receive Stock with a fair market value equal to
125% of the cash amount of the award elected to be paid in Stock. The fair
market value of the Stock will be determined based on the average of the high
and the low price of the Stock on the date the award is paid. Participants must
elect to receive Stock at least six months prior to the date of payment of the
award. This Stock will be restricted in its transferability for a period of two
years after the date of issuance. In addition, the Committee has discretion to
impose other restrictions on shares of Stock issued under the Annual Incentive
Plan.
Awards under the Annual Incentive Plan as determined by the Committee to be
earned, will be made as soon as practicable after the close of the relevant
fiscal year. Prior to the occurrence of a change in control of the Company, but
not thereafter, the Committee has the sole discretion to cancel all or any
portion of any award with or without cause. Stock will not be issued under the
Annual Incentive Plan unless and until the stockholders approve this amendment
to the Annual Incentive Plan. The number of shares of Stock available for awards
under the Annual Incentive Plan shall be 100,000 shares, subject to adjustment
in the event of any increase or decrease in the number of shares of Stock by
reason of payment of a stock dividend, a stock split, merger, consolidation,
rights offering or other change in the corporate structure or shares.
The Annual Incentive Plan may be amended by the Board and, in certain
circumstances by the Committee, except that any such amendment must be approved
by stockholders if such approval is necessary in order to maintain compliance
with the applicable rules of Section 162(m), or if the absence of stockholder
approval would cause the Annual Incentive Plan to fail to comply with Rule 16b-3
under the Securities Exchange Act of 1934, or any other applicable law or
regulation.
For Federal income tax purposes, awards paid under the Annual Incentive
Plan will be taxable ordinary income to the Participant upon receipt. To the
extent an award is paid in shares of Stock, the amount ordinary income will be
equal to the fair market value of such shares on the date of issuance. The
Company will be entitled to a Federal income tax deduction at the same time and
to the same
14
<PAGE>
extent as the Participant recognizes ordinary income, except to the extent that
such deductibility is limited by the $1 million deduction limit under Section
162(m) of the Internal Revenue Code.
This summary of the Annual Incentive Plan is qualified in its entirety by
reference to the entire text of the Annual Incentive Plan which is attached as
Exhibit B.
The affirmative vote of the holders of a majority of the shares of Stock of
the Company represented and voting at the annual meeting is required for
approval of the amendment to the Annual Incentive Plan.
The Board of Directors recommends a vote FOR the amendment to the Annual
Incentive Plan.
V. OTHER MATTERS
The Company knows of no other matters to come before the meeting. If any
other matters properly come before the meeting, the proxies solicited hereby
will be voted on such matter in accordance with the judgment of the persons
voting such proxies and will be determined by the vote of a majority of the
shares voting thereon at the meeting.
VI. STOCKHOLDER PROPOSALS
Stockholders wishing to submit proposals for inclusion in the Board of
Directors' proxy material for the Annual Meeting of Stockholders tentatively
scheduled for November 1, 1996 should submit them in writing to the Secretary of
the Company, First Brands Corporation, 83 Wooster Heights Road, P.O. Box 1911,
Danbury, CT 06813-1911 no later than May 6, 1996.
15
<PAGE>
EXHIBIT A
FIRST BRANDS CORPORATION
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
The First Brands Corporation Non-Employee Directors Stock Option Plan (the
'Directors' Option Plan') is established to attract, retain and compensate for
service highly qualified individuals who are not current employees of First
Brands Corporation (the 'Company') as members of the Board of Directors of the
Company and to enable them to increase their ownership in the Company's common
stock, $0.01 par value per share (the 'Stock'). The Directors' Option Plan will
be beneficial to the Company and its stockholders since it will allow these
directors to have a greater personal financial stake in the Company through the
ownership of Company's Stock, in addition to underscoring their common interest
with stockholders in increasing the value of the Stock longer term.
1. ELIGIBILITY
All members of the Company's Board of Directors who are not current
employees of the Company or any of its subsidiaries ('Non-Employee Directors')
are eligible to participate in this Directors' Option Plan.
2. OPTIONS
Only nonqualified stock options ('NQSOs') may be granted under this
Directors' Option Plan.
3. SHARES AVAILABLE
a) There is hereby reserved for issuance under this Directors' Option Plan
60,000 shares of Stock, which may be authorized but unissued shares, treasury
shares, or shares purchased on the open market.
b) In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, rights offering, or any
other change in the corporate structure or shares of capital stock of the
Company, appropriate adjustments shall be made in the number and kind of shares
authorized by this Directors' Option Plan, in the number and kind of shares
covered by, and in the option price of outstanding NQSOs under this Directors'
Option Plan shall be made if, and in the same manner as, such adjustments are
made to NQSOs issued under the Company's then current incentive stock plan, and
if there are no NQSOs issued and outstanding, then as determined by the Board of
Directors.
4. ANNUAL GRANT OF NONQUALIFIED STOCK OPTIONS
Each year on the first Friday following the Company's Annual Meeting of
Stockholders, each individual elected, reelected or continuing as a Non-Employee
Director shall automatically receive a NQSO covering 2,000 shares of Stock in
the first year that the Non-Employee Director receives such a grant and 1,000
shares each subsequent year for a maximum of four (4) years. Notwithstanding the
foregoing, if, on that first Friday, the General Counsel of the Company
determines, in her/his sole discretion, that any executive officer or member of
the Board of Directors of the Company is in possession of material, undisclosed
information about the Company, then the annual grant of NQSOs to Non-Employee
Directors shall be suspended until the second day after public dissemination of
such information. If the Stock is not traded on the New York Stock Exchange on
any date a grant would otherwise be awarded, then the grant shall be made the
next day thereafter that the Stock is so traded.
5. OPTION EXERCISE PRICE
The exercise price of the NQSOs granted under the Directors' Option Plan
shall be the average of the high and low prices at which the Stock is traded on
the date of the grant, or if the Stock is not traded on such date, then on the
most recent date on which the Stock was traded, as quoted on the New York Stock
Exchange on that date, rounding out such figure to the next higher multiple of
25 cents (unless the figure is already a multiple of 25 cents).
A-1
<PAGE>
6. OPTION PERIOD
A NQSO granted under this Directors' Option Plan shall become exercisable
two (2) years after date of grant and shall expire ten (10) years after date of
grant.
7. PAYMENT
The NQSO price shall be paid in cash in U.S. dollars at the time the NQSO
is exercised.
8. CESSATION OF SERVICE
Upon cessation of service as a Non-Employee Director, other than for
reasons of retirement, death or disability, only those NQSOs exercisable at the
date of cessation of service shall continue to be exercisable by the
Non-Employee Director. Such NQSOs must be exercised within sixty (60) days of
cessation of service but in no event after the expiration of the ten (10) year
period or they shall be forfeited.
9. RETIREMENT
If a Non-Employee Director ceases to serve as a Non-Employee Director, as a
result of a mandatory retirement pursuant to Board policy, all options granted
hereunder shall become immediately exercisable, provided, however, that options
granted less than twelve (12) months prior to such retirement shall not become
exercisable until twelve (12) months and one (1) day following the date of
grant. All such options may be exercised at any time and from time to time for a
period ending on the earlier of (i) two (2) years following the date of the
Non-Employee Director's retirement, or (ii) the expiration of the ten (10) year
option term.
10. DEATH
Upon death of a Non-Employee Director, all options granted hereunder to
such Non-Employee Director shall become immediately exercisable, and the
executors, administrators, or any person or persons to whom such NQSOs have been
transferred by will or by the laws of descent and distribution, shall have the
right at any time and from time to time to exercise such NQSOs for a period
ending on the earlier of (i) two (2) years following the date of death of the
Non-Employee Director, or (ii) the expiration of the ten (10) year option term.
11. DISABILITY
Upon the disability of the Non-Employee Director, all NQSOs granted
hereunder to such Non-Employee Director shall become immediately exercisable,
and such NQSOs may be exercised at any time and from time to time by his or her
guardian or legal representative for a period ending on the earlier of (i) two
(2) years from the date such disability occurred, or (ii) the expiration of the
ten (10) year option term. Disability means the inability of the Non-Employee
Director for reasons of illness or accident to perform the duties of his or her
directorship for a period of three (3) months.
12. ADMINISTRATION, TERMINATION AND AMENDMENT OF THE DIRECTORS' OPTION PLAN
This Directors' Option Plan shall be administered by the Board of Directors
of the Company. This Directors' Option Plan may be terminated or amended by the
Board of Directors as it deems advisable, provided however, that an amendment
revising the price, date of exercisability, option period of, or amount of
shares under a NQSO shall not be made more frequently than every six (6) months
unless necessary to comply with the Internal Revenue Code of 1986, as amended,
or with the Employee Retirement Income Security Act of 1974, as amended. No
termination or amendment may revoke or alter in a manner unfavorable to the
Non-Employee Director any NQSOs then outstanding, nor may the Board of Directors
amend this Directors' Option Plan without stockholder approval where the absence
of such approval would cause the Directors' Option Plan to fail to comply with
Rule 16b-3 under the Securities Exchange Act of 1934, or any other requirement
of applicable law or regulation.
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13. NONTRANSFERABILITY
No NQSO granted under this Directors' Option Plan is transferable other
than by will or the laws of descent and distribution. During the Non-Employee
Director's lifetime, a NQSO may only be exercised by the Non-Employee Director
or the Non-Employee Director's guardian or legal representative.
14. EFFECTIVE DATE AND DURATION OF DIRECTORS' OPTION PLAN
The Directors' Option Plan shall become effective on the first Friday
following the Company's Annual Meeting of Stockholders at which the Directors'
Option Plan is approved by the Stockholders. The Directors' Option Plan shall
terminate on the first Friday following the fifth Annual Meeting of the
Stockholders at which Directors are elected succeeding the Annual Meeting of the
Stockholders at which the Directors' Option Plan was approved by stockholders,
unless the Directors' Option Plan is extended or terminated at an earlier date
by the Board of Directors in accordance with Section 12; provided, however, that
the termination of the Directors' Option Plan shall have no effect upon NQSOs
outstanding at the time of such termination.
15. LISTING AND REGISTRATION
Each NQSO shall be subject to the requirement that if at any time the Board
of Directors shall determine, in its discretion, that the listing, registration
or qualification of the Stock subject to such NQSO upon any securities exchange
or under any state or federal law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition of, or in
connection with, the granting of such NQSO or the issue or purchase of share
thereunder, no such NQSO may be exercised in whole or in part unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any condition not acceptable to the Board of
Directors.
16. OPTION AGREEMENT
Each NQSO granted hereunder shall be evidenced by an agreement between the
grantee and the Company which shall contain terms and provisions consistent with
the provisions of the Directors' Option Plan.
17. NO RIGHTS AS STOCKHOLDER
Neither a Non-Employee Director nor a Non-Employee Director's legal
representative shall be, or have any of the rights and privileges of, a
stockholder of the Company in respect of any shares purchasable upon the
exercise of any NQSO, in whole or in part, unless and until certificates for
such shares shall have been issued.
18. GOVERNING LAW
All questions pertaining to the construction, regulation, validity and
effect of the provisions of the Directors' Option Plan shall be determined in
accordance with the laws of the State of Connecticut other than the conflict of
laws provisions of such laws.
A-3
<PAGE>
EXHIBIT B
FIRST BRANDS CORPORATION
ANNUAL INCENTIVE PLAN
SECTION 1. PURPOSE OF PLAN
The purpose of the First Brands Corporation Annual Incentive Plan is to
promote the success of First Brands Corporation by providing performance-based
compensation for certain key employees.
SECTION 2. DEFINITIONS
The following words and phrases as used herein shall have the following
meanings unless a different meaning is plainly required by the context:
2.1. 'Administrator' means the person designated by the Committee to
undertake certain administrative functions provided for in the Plan and as
authorized by the Committee.
2.2. 'Award' means the amount payable to a Participant under the Plan
as determined under Section 4.
2.3 'Award Payment Date' means the date that Awards are payable to
participants in accordance with Section 5.1.
2.4. 'Award Year' means the fiscal year of the Company with respect to
which Awards are payable under the Plan.
2.5. 'Board of Directors' means the Board of Directors of the Company.
2.6. 'Code' means the Internal Revenue Code of 1986, as amended from
time-to- time.
2.7. 'Committee' means the Compensation Committee of the Board of
Directors which shall administer the Plan in accordance with Section 3.
2.8. 'Common Stock' means the common stock, $0.01 par value, of the
Company.
2.9. 'Company' means First Brands Corporation or any successor to it
in ownership of all or substantially all of its assets.
2.10. 'Continuing Director' means each individual who is a member of
the Board of Directors on the date that this Plan was adopted by the Board
of Directors (the 'Effective Date'), and each individual who becomes a
member of the Board of Directors after the Effective Date without
opposition from a majority of the then Continuing Directors; PROVIDED THAT,
an individual shall not be a Continuing Director after he or she resigns as
a member of the Board.
2.11. 'Fair Market Value' means the average of the high and the low
prices at which the Common Stock is traded on the date of the Award
('Payment Date'), as quoted on the New York Stock Exchange on that date or
if the Common Stock is not traded on such date, on the then most recent
date thereafter on which the Stock was traded.
2.12. 'Management Participant' means a Participant determined by the
Committee to be a Management Participant.
2.13. 'Participant' means any person employed by one or more
Participating Companies who is determined by the Committee (i) to be
covered employee as defined in Section 162 (m) of the Code for the
proceeding year (ii) likely to be such a covered employee for the Award
Year.
2.14. 'Participating Company' shall mean the Company, and any
subsidiary or other affiliated entity (whether or not incorporated) which
is designated by the Board of Directors to participate in the Plan.
2.15. 'Plan' means the First Brands Corporation Annual Incentive Plan,
as amended from time-to-time.
2.16. 'Restricted Stock' means the restricted shares of Common Stock
issued to participants pursuant to Section 6 of the Plan.
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SECTION 3. ADMINISTRATION OF THE PLAN
The Committee. The Plan shall be administered by the Committee whose
members (i) are not eligible to participate in the Plan, (ii) are not employees
of a Participating Company and (iii) are outside directors within the meaning of
Section 162(m) of the Code. The Committee shall consult with the Chief Executive
Officer of the Company in determining the Employees who are to receive Awards
under the Plan and the amount of such Awards and shall otherwise be responsible
for the administration of the Plan. The Committee shall appoint an Administrator
to undertake certain administrative functions provided for in the Plan and
otherwise authorized by the Committee. The Committee also shall have full
authority and discretion to construe and interpret the Plan and adopt rules and
regulations governing administration of the Plan, and exercise the remaining
duties and powers conferred on it by the Plan.
SECTION 4. PERFORMANCE GOALS
The Committee shall adopt objective performance goals for an Award Year
which shall be based upon the Company's operating income or such other financial
criteria as the Committee shall determine. The Committee may then establish an
Award schedule based upon achievement during the Award Year of such performance
goals. The Award schedule and performance goals shall be approved by the
Committee prior to or after the start of the Award Year, except that the Award
schedule and performance goals may not be approved after the start of the Award
Year unless the Awards made pursuant there to would be deductible by the
Corporation under Section 162(m) of the Code.
SECTION 5. ELECTIONS AS TO AWARDS
5.1. Awards. Except as provided in Section 5.2, Awards granted under the
Plan shall be paid to Participants as promptly as practicable after the close of
the Award Year. Any such distribution shall be in cash or, as provided in
Section 5.2, shares of Restricted Stock.
5.2. A Management Participant may elect to forego all or any part of the
cash bonus (if any) which he or she would otherwise receive under the Plan for
an Award Year and to receive shares of Restricted Stock in lieu thereof having a
Fair Market Value equal to one hundred twenty five percent (125%) of the amount
of the Management Participant's bonus Award for that Award Year that he or she
elects to receive in Restricted Stock. The election must be made at least six
months prior to the Award Payment Date and in accordance with forms prescribed
by the Administrator. An election shall be irrevocable, except that if a
Management Participant's employment ends after the date of his or her election
and before the subsequent Award Payment Date, any election which he or she may
have made pursuant to this Section 5.2 shall be void and of no effect. If an
election form is not properly completed and returned to the Administrator before
the date by which an election is required, the Participant will be deemed to
have elected not to receive Restricted Stock with respect to that Award Year.
SECTION 6. RESTRICTED STOCK AWARDS
6.1. A Management Participant who timely elects to receive Restricted Stock
with respect to an Award Year shall be credited with the number of whole shares
of Restricted Stock having a Fair Market Value as of the Award Payment Date
equal to one hundred twenty-five percent (125%) of the amount of the cash bonus
which he elected to forego. The balance of his Award shall be paid in cash on
the Award Payment Date. Each such crediting of Restricted Stock shall be
reflected in a written Restricted Stock Agreement between the Management
Participant and the Company.
6.2 Shares Available. The number of shares of Restricted Stock available
for Award under this Plan is 100,000 shares of Restricted Stock, which may be
authorized but unissued shares, treasury shares, or shares purchased on the open
market.
6.3 Recapitalization Adjustment. In the event of a reorganization,
recapitalization, stock split, stock dividend, combination of shares, merger,
consolidation, rights offering, or any other change in the corporate structure
or shares of the Company, the aggregate number of shares of Restricted Stock
available for issuance under this Plan shall be as though the shares of
Restricted Stock had been outstanding prior to any of the above-described
adjustments. In the event that the Company shall issue additional shares of
Stock for cash or other good consideration, there shall be no adjustment in the
number of shares of Restricted Stock available for Award pursuant to this Plan.
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6.4. Transferability of Restricted Stock. Restricted Stock may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated until
after the second anniversary of the Award Date as of which such shares are
credited to the Participant in accordance with Section 6.1. Such two-year period
is referred to herein as the 'Period of Restriction.'
6.5. Other Restrictions. The Committee shall impose such other restrictions
on any shares of Restricted Stock granted pursuant to the Plan as it may deem
necessary or advisable under applicable Federal or state securities law. In
order to insure compliance with the limitations of Section 6.4, the
Administrator shall reflect the grant of shares of Restricted Stock as an entry
in books maintained for such purpose, and certificates for shares of Restricted
Stock shall bear a legend describing the restrictions on transferability. The
Participant may designate, on forms provided for the purpose by the
Administrator, one or more beneficiaries to receive any shares of Restricted
Stock distributable under this Plan after the death of the Participant.
6.6. Voting Rights. Each Participant to whom shares of Restricted Stock are
awarded pursuant to the Plan shall be entitled to exercise full voting rights
with respect to those shares.
6.7. Dividends and Other Distributions. During the Period of Restriction,
each Participant to whom shares of Restricted Stock are awarded pursuant to the
Plan shall be entitled to receive all dividends and other distributions paid
with respect to those shares. If any such dividends or distributions are paid in
shares of Common Stock, such shares shall be subject to the same restrictions
(such as limitations on transferability) as the shares of Restricted Stock with
respect to which they were paid, and shall be held as Restricted Stock under the
same terms and conditions as the Restricted Stock with respect to which such
stock dividends are issued.
6.8. Termination of Employment. If the Participant's employment with the
Company is terminated prior to the end of the Period of Restriction for any
reason including death, retirement, disability or voluntary or involuntary
termination or resignation, the Restricted Stock shall remain subject to the
applicable restrictions for the Period of Restriction and, except as may
otherwise be provided pursuant to Section 6.5, the shares of Restricted Stock
shall thereafter be free of restrictions and freely transferable.
6.9. Removal of Restrictions. Except as otherwise provided in this Section
and by the Federal and state securities laws, shares of Restricted Stock granted
under the Plan shall become freely transferable by the Participant after the
last day of the Period of Restriction applicable to such shares.
SECTION 7. MISCELLANEOUS
7.1. No Right of Continued Employment. Neither the establishment of the
Plan nor the payment of any benefits hereunder nor any action of any
Participating Company or of the Board of Directors or of the Committee or the
Administrator, shall be held or construed to confer upon any person any legal
right to be continued in the employ of a Participating Company and each
Participating Company expressly reserves the right to discharge a Participant
whenever the interest of any such company in its sole discretion may so require
without liability on the part of such Participating Company, the Board of
Directors or the Committee or the Administrator, except as to any rights which
may be expressly conferred upon such Participant under the Plan.
7.2. Discretion of Company, Board of Directors, Committee and
Administrator. Any decision made or action taken by the Company, the Board of
Directors or by the Committee or the Administrator arising out of or in
connection with the construction, administration, interpretation and effect of
the Plan shall lie within the absolute discretion of the Company, the Board of
Directors, the Committee or the Administrator, as the case may be, and shall be
conclusive and binding upon all persons.
7.3. Absence of Liability. No member of the Board of Directors or of the
Committee or the Administrator, or officer of any Participating Company shall be
liable for any act or action hereunder, whether of commission or omission, taken
by any other member, or by any officer, agent, or employee, or, except in
circumstances involving his bad faith, for anything done or omitted to be done
by himself or herself.
7.4. Inalienability of Benefits and Interests. (a) Except as expressly
provided by the Committee and in subsection (b) hereof, no benefit payable under
or interest in the Plan shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any
such
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<PAGE>
attempted action shall be void and no such benefit or interest shall be in any
manner liable for or subject to debts, contracts, liabilities, engagements or
torts of any Participant, former Participant or beneficiary.
(b) The provisions of subsection (a) hereof shall not apply to an
assignment of a payment due after the death of the Participant by the deceased
Participant's legal representative or beneficiary if such assignment is made for
the purposes of settling the affairs of such deceased Participant.
7.5. Connecticut Law to Govern. All questions pertaining to the
construction, regulation, validity and effect of the provisions of the Plan
shall be determined in accordance with the laws of the State of Connecticut,
other than the conflict of law provisions.
7.6. Cancellation of Awards. (a) Prior to the occurrence of a Change in
Control, but not thereafter, the Committee may, in its sole discretion and with
or without cause, cancel any Award in whole or in part. Such cancellation shall
be effective as of the date specified by the Committee.
(b) For purposes of Section 7.6, a 'Change of Control' shall be deemed to
have occurred if:
(i) Any 'person' (as such term is used in Section 13 (d) and 14 (d) of
the Securities Exchange Act of 1934), other than the Company, is or becomes
the 'beneficial owner' (as defined in Rule 13d 3 under the Securities
Exchange Act of 1934), directly or indirectly, of securities of the Company
which represent thirty percent (30%) or more of the combined voting power
of the Company's then outstanding securities, without the prior written
consent of a majority of the Continuing Directors;
(ii) The Continuing Directors cease to comprise a majority of the
Board;
(iii) The Shareholders of the Company approve a sale of substantially
all or all of the assets of the Company; or
(iv) The Company is not the surviving and parent corporation as a
result of any merger or consolidation to which it is a party, not
including, however, a merger solely to effect a change in the state of
incorporation.
(c) Prior to payment of any Award, the Committee may, in its sole
discretion, in cases involving a serious breach of conduct by a Participant or
former Participant, or activity of a former Participant in competition with the
business of a Participating Company, cancel any Award, in whole or in part. Such
cancellation shall be effective as of the date specified by the Committee. The
determination of whether a Participant or former Participant has engaged in a
serious breach of conduct or activity in competition with the business of a
Participating Company shall be determined by the Committee in good faith and in
its sole discretion.
SECTION 8. AMENDMENT, SUSPENSION OR TERMINATION OF PLAN
(a) The Board of Directors may from time-to-time amend, suspend or
terminate in whole or in part, and if suspended or terminated, may reinstate any
or all of the provisions of the Plan except that without the consent of the
Participant no amendment, suspension or termination of the Plan shall adversely
affect the rights of any Participant with respect to Awards previously made to
such Participant.
(b) The Plan may also be amended by the Committee provided such amendment
does not materially change the underlying policy reflected by, or the level of
benefits provided by, the Plan.
(c) Notwithstanding subsections (a) and (b), above, no amendment may be
effective without Stockholder approval if such Stockholder approval is necessary
to comply with the applicable rules of Section 162(m) of the Code or the absence
of such approval would cause the Plan to fail to comply with Rule 16 b-3 under
the Securities Exchange Act of 1934 or any other requirement of applicable law
or regulation.
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[Logo]
<PAGE>
APPENDIX 1
PROXY CARD
PROXY
FIRST BRANDS CORPORATION
83 WOOSTER HEIGHTS ROAD
DANBURY, CT 06813-1911
[LOGO]
ANNUAL MEETING OF STOCKHOLDERS -- FRIDAY, OCTOBER 27, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints ALFRED E. DUDLEY and JOSEPH B. FUREY, and
each of them, with power of substitution, as proxies to represent the
undersigned at the Annual Meeting of Stockholders to be held at the Danbury
Hilton Hotel, 18 Old Ridgebury Road, Danbury, Connecticut on Friday, October 27,
1995 at 10:00 a.m., local time and at any adjournment thereof, and to vote the
shares of common stock the undersigned would be entitled to vote if personally
present, as indicated below and on the reverse side hereof.
THE SHARES REPRESENTED BY THE PROXY WILL BE VOTED AS DIRECTED. IF NO
CONTRARY INSTRUCTION IS GIVEN, THE SHARES WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES FOR DIRECTOR SET FORTH BELOW, FOR THE RATIFICATION OF KPMG PEAT MARWICK
LLP AS INDEPENDENT AUDITORS FOR FISCAL 1996, FOR THE RATIFICATION OF THE
DIRECTOR STOCK OPTION PLAN, FOR THE RATIFICATION OF THE USE OF COMPANY STOCK AS
AN ALTERNATIVE IN THE ANNUAL INCENTIVE PLAN AND AT THE DISCRETION OF THE PROXY
UPON SUCH OTHER BUSINESS, IF ANY, AS MAY BE PROPERLY BROUGHT BEFORE THE MEETING.
PLEASE MARK BOXES [*] OR [x] IN BLUE OR BLACK INK.
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS FOR all nominees listed below (except as WITHHOLD AUTHORITY to vote for all
indicated to the contrary below) [ ] nominees listed below [ ]
</TABLE>
<PAGE>
Gary E. Gardner, Denis Newman, Ervin R. Shames
(Continued and to be signed on the other side)
<PAGE>
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
2. Proposal to ratify the selection of KPMG Peat 3. Proposal to ratify the adoption of a Non-
Marwick LLP as independent auditors for the Employee Director Stock Option Plan.
fiscal year 1996.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ]
4. Proposal to ratify the use of company stock as an
alternative in the Annual Incentive Plan for
Senior Management.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
</TABLE>
If no direction is made, this proxy will be voted for Proposals 1, 2, 3, and 4.
Please sign exactly as
name appears below.
When shares are held by
joint tenants, both
should sign. When
signing as attorney, as
executor,
administrator, trustee
or guardian, please
give full title as
such. If a corporation,
please sign in full
corporate name by
President or other
authorized officer. If
a partnership, please
sign in partnership
name by authorized
person.
Dated:..........., 1995
.......................
Signature
.......................
Signature if held
jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
